Archive for November, 2008

Sport is not an economic activity like any other. Sport is about sharing, surpassing oneself, exchange, respect. Sport is about emotions. Football is a game rather than just a product or a market. It is a spectacle rather than just a business.

Replace “sport” and “football” with “painting” or “programming” and one sees how meaningless of a statement this is. Indeed, an “economic activity” is virtually defined by the very terms which are proffered forth to except it from so cold a classification.

If President Platini would have used “financial activity” instead of “economic activity,” I would be closer to agreeing with him. Finance, like economics, is built upon notions of human behavior for its theories, but finance concerns itself almost exclusively with money, and this narrow focus seems to be the thing to which the President takes umbrage. I still think the sentiment would be misguided, but it would at least be a bit more on target.

Unlike Jewel, if I could tell the world just one thing, it would be that economics is far too rich a subject only to concern itself with money.

I was pleasantly surprised at the Hayekian flavor of the credited response to the above question. Too many students of economics can construct neat little diagrams and solve consumption functions while missing the truly marvelous insights just beyond the slopes. It’s a good sign that a question written for non-economists manages to bypass these constructions and arrive at the true destination.

Today walking to my car I approached the crosswalk of death and saw blue lights flashing and two damaged vehicles pulled to the side of the road. As the light signaled me to cross, I took some pleasure in the thought that perhaps the drivers’ self-destructive turn would be my salvation, much like an Indian might have felt watching the cavalry rushing back east in 1861.

This thought, however, would ironically nearly foment by doom by reducing my usual eagle-like acuity. Just as I stepped foot on the concrete median, someone ran a seconds-old red light and made a new record for “Times Jeff Has Almost Been Maimed by Woman Driving SUV (3).”

Every morning, not far from where a diminutive man assailed me with darts, I face another threat: drivers turning right on red who are unaccustomed to pedestrians at crosswalks. These drivers, focused solely on finding a break in rush hour traffic long enough to turn onto the thoroughfare, will often complete the entire maneuver with their head turned leftward, not once bothering to check what lies before them.

Once I was bumped as I attempted to take Crosswalk A. Ms. McRush in her SUV was so fixated on making the turn that not only had she failed to notice my entering the crosswalk, but she also lurched forward twice—yes twice— as she weighed whether or not to make the dart into traffic, striking me both times in a matter of a second or two (My hand slapping down on her hood finally got her attention).

Crosswalk B requires still more vigilance. Here the danger is that drivers gun it once they realize the light has changed, rounding the corner with too high a degree of fastness and furiousness. I’ve almost had my feet run over a few times, and even just this morning, and despite having made eye contact with her mere seconds earlier, another wonderful woman nearly clipped me with her SUV as I stepped off the curb. So great was my anger at her blithesome unawareness that I very nearly tore off my own shoe and threw it at her back window.

May the Lord help me if He deigns to let it snow this winter, for I will surely perish as silly Southerners scramble on slippery streets for their bread and milk.

Ask anyone on the street these days about middle class incomes and, if they don’t threaten to mace you if you don’t please step away, they might tell you a sad story of stagnation. Adjusting for inflation, the typical household is earning but a pittance more than the 1970s, while all the gains in wealth have gone to feed fancy feasts to the fat cats at the top of the distribution.

But Terry J. Fitzgerald, who may or may not be related to F. Scott Fitzgerald (or even F. Scott Key, for that matter), and who, though failing to write a Great American Novel or national anthem, has nonetheless written many a satisfactory research article for the Minneapolis Fed, recently penned a rejoinder to this dominant narrative that is gloriously free of turgid run-on sentences such as the one I’m writing at this very moment. Par exemple:

The U.S. Census Bureau reports that median household income stagnated from 1976 to 2006, growing by only 18 percent. In contrast, data from the Bureau of Economic Analysis indicate that income per person was up 80 percent.

The fact that an 18 percent gain in purchasing power is considered stagnation may in the eyes of some be rivaled only by the Turducken as a signal of how prosperous our society has become. Ignoring that consideration, however, leaves one to wonder about the apparent contradiction in the two statistics above. How can income per person have grown four times as much as the income for a typical household? Terry tells the story in pictures:

About 15-20 percent of the difference between the per person and household figures is caused by increasing inequality, but most of the discrepancy is explained by other factors such has household composition, definitional differences, and different methods of calculating inflation. Briefly:

Household composition – The household in 1976 looked different than the household of today. They are smaller, for example, and less likely to have a married couple, and this accounts for a smaller growth in household income. Comparing apples to apples yields much higher growth rates.

Definitional differences – Unlike the Census, the BEA includes “employer contributions to employee pension and insurance funds and in-kind transfer payments such as Medicaid, food stamps and energy assistance” in its measure of income. Including these forms of compensation boosts income growth.

Different methods of calculating inflation – There is no standard way of calculating inflation, and income statistics over time are sensitive to which method is used. Using a different method that attempts to capture reality better results in higher growth.

Putting all this together yields a 44-62 percent increase in median household income over the past 30 years. The assumptions and the methodology are yet imperfect, but this is hardly a result at which to cluck, quack, or gobble.

Two days ago, as I made the ten minute walk from work to my car, a man, evidently of modest means, crossed over from the other side of the street to just a few paces ahead of me. No sooner had his well-worn shoes hit the sidewalk than he stooped suddenly and plucked a dollar bill from the concrete. His pause allowed me to catch up to him, and I congratulated him on his lucky day and chuckled at his beaming countenance as I passed him by.

A nanosecond later, it dawned on me that his gain had been my loss, and fortune’s grim way quickly dissipated my good cheer. But for this man’s crossing the street, that dollar would have been mine! What’s more, the man had jaywalked when he crossed the street, meaning his windfall had been illicitly acquired. Based upon my reading of the philosophy literature, I’m pretty sure it would have been ethically sound for me to have punched the scoundrel in the face and liberated my dollar from his pocket.

Pondering this, I was turning the corner into the parking lot when my iPod’s earbud wires became entangled in a low hanging branch, immobilizing me. Just then, a small man brandishing a bar dart leapt from nearby bushes. He poked me a half-dozen times, all the while yelling:

“Joab jabs you! Joab jabs you!”

Sensing that feigning death was my only recourse to further cutaneous cutting, I went limp and allowed the fellow to extricate my slumped form from its ensnarement. Summoning a strength belied by his tiny stature, he dragged me to a nearby construction site, placed a few loose bricks atop my body, and disappeared into the dusk without a word.